Pro Tools maker Avid Technologies downsizes in face of competition

Avid announced it lost $15 million and will lay-off 350 employees and sell three divisions

Avid makes the Pro Tools audio editing software (DAW) that is used to make more movie soundtracks and recordings than any other program.

The founders of AVID created the genre of non-linear audio editing. That has not been enough to keep them profitable. They face stiff competition as the recording industry sheds costs and re-tools with new technology.

Avid will lay-off 350 employees, that is on top of the 200 dismissed in the fall of 2011. They lost $15 million in the past fiscal quarter. Revenues declined by $14 million in the quarter.

Last week in other industry news, Greg Hendershott the founder of Cakewalk announced his retirement. While nothing official has been said, Cakewalk prematurely released Sonar X1in 2010 with disastrous results. The software was a beta release and Cakewalk took months to fix all the bugs. The reputation of the company was tarnished and no doubt there were unhappy people at Roland over the gaffe.

Is there an audio industry shake up on the horizon?

Avid is selling off the consumer software and hardware lines that it purchased to get ahead of Apple who moved into their market with Apple Logic Pro.

M-Audio which makes audio interfaces, keyboards and studio monitors is being sold along with Pinnacle video software for $17 million. Avid paid $630 million for M-Audio and Pinnacle.

Avid said it will focus on the professional audio software Pro Tools that has become the industry standard for movie studios and post production where synchronization of audio and video is critical.

Apple has ported its DAW to the iPadPro Tools has faced an army of competition in the music recording business that reduced its lead and advantage to a slim margin at best. Last year they released Pro Tools 10 for under $500 to compete with Cubase, Sonar, Reason, Reaper and a dozen other digital audio workstation (DAW) products.

Avid bundled Pro Tools with M-Audio products to “move boxes” but also damaged their market position by twining with the obviously lower “consumer quality” of M-Audio.

Avid has not been able to keep the technological pace with the competition. Cakewalk Sonar, owned by Roland, has been 64-bit software for years. Steinberg Cubase, owned by Yamaha, released their 64-bit software last year.

Other new products like Reaper have the latest technology and sell for $60.

Apple’s Logic Pro software is available on the popular iPad. Avid is at least two generations behind the technology curve on tablets and Windows 7 and the soon to be released Windows 8.

Without deeper pockets, Avid may not make the transition.

Avid also owns Sibelius music notation software and Euphonix control surfaces.

The music and technology business change constantly and companies once industry leaders can go from hero to goat in a flash.